Friday, February 22, 2002
Network Firms Have 3 of Top 10 Defense Verdicts
Margaret Cronin Fisk -- The National Law Journal -- February 11, 2002
[In what has to be regarded as confirmation of the high level of trial skills abounding in our Network firms, no less than 3 of the top 10 defense verdicts (should be 4, as below), as judged by The National Law Journal, were won by Network firms. A summary of the cases won by Snell & Wilmer (a medical malpractice case and a Ford rollover case) and by Beirne, Maynard & Parson (a Rezulin drug case) follows. Also, the Goodell DeVries law firm won a defense verdict in another Rezulin case early this month in Montgomery County, Maryland after a 5 week trial. The jury there was out less than one hour. Kudos to all three firms. EM]
CANCER VICTIM'S 'HINDSIGHT' DOESN'T SWAY ARIZONA JURY
CASE: Mauk v. Williams, No. CV-99-18707 (Maricopa Co., Ariz., Super. Ct.)
PLAINTIFFS' ATTORNEY: Don Bivens of Phoenix's Meyer, Hendricks & Bivens
DEFENSE ATTORNEYS: Douglas W. Seitz and Ginamarie Rossano of Phoenix's Snell & Wilmer
JURY VERDICT: for the defense
In 1993, Sherry Mauk, then 30, underwent a mastectomy of her right breast after the discovery of cancer. During the surgery, 13 lymph nodes were also removed and biopsied to determine if any cancer cells remained, said defense counsel Douglas W. Seitz. The tissue slides were sent to pathologist James Williams, who viewed the slides and pronounced the patient cancer-free.
But, five years later, Mauk was diagnosed with liver cancer; she later developed leukemia. At the time of trial, she was expected to die within months.
After the return of the cancer, Mauk and her family filed a medical malpractice action against Williams and his employer, the Mayo Clinic. The plaintiffs claimed that Williams had missed clear evidence of cancer in five of the lymph nodes and that this allowed the cancer to grow unchecked for several years. According to the plaintiffs' experts, Mauk could have undergone chemotherapy when the disease was at a nascent stage and she would have been cancer-free by the time of trial.
The sympathy for the plaintiff was significant, said Seitz. From opening statement onward, plaintiffs' counsel Donald Bivens appealed to the emotions of the jury, stressing the loss to Mauk and her family. "Because these defendants did not do their job, John Mauk has lost his best friend, his wife of 20 years," Bivens said in opening. Then referring to Mauk's 9-year-old daughter, he said, "She will likely have very little memory of her mother being well because these doctors did not do their job."
The plaintiffs' expert pathologist, James Connelly, testified that cancer cells were evident in the lymph nodes and that Williams' failure to find the cancer was a deviation from the standard of care. The defense concentrated on attacking Connelly head-on, contending that he was predisposed to finding cancer in the slides. "Their expert knew the results at the time he looked at the slides," said Seitz. "He was looking for cancer."
A defense pathology expert also looked at the slides, but found the cancer only after a second review, when he knew what he was looking for, Seitz said.
"You could find it if you looked hard enough," Seitz said, but it was discernible only if the pathologist already knew that cancer was there. The plaintiffs were using "20-20 hindsight," Seitz said. "It was not below the standard of care to not find invasive cancer," he added.
The plaintiffs sought more than $15 million, but on March 16, 2001, a Phoenix jury found no liability. There was no appeal. Mauk later died.
ARGUING DRIVER ERROR, FORD WINS ROLLOVER CASE
CASE TYPE: Products liability
CASE: Maier v. Ford Motor Co., No. 58942 (Hunt Co., Texas, Dist. Ct.)
PLAINTIFFS' ATTORNEYS: Anthony L. Vitullo and Zackary J. Mayer of Dallas' Fletcher & Springer; and Bruce Beasley, solo practitioner, of Fort Worth, Texas
DEFENSE ATTORNEYS: Ronald Cabaniss of Maitland, Fla.'s Cabaniss, Smith, Toole & Wiggins; Smith Gilley, solo practitioner, of Greenville, Texas; Richard H. Grafton of Austin, Texas' Brown McCarroll; Patrick E. Broom, of the Tucson, Ariz., office of Phoenix's Snell & Wilmer
JURY VERDICT: for the defense
For the past two years, Ford Motor Co. has been embroiled in a public relations nightmare revolving around tread separations in Firestone tires used on Ford Explorers and subsequent rollover accidents connected to these tire separations.
In this trial in Greenville, Texas, however, Ford won a complete defense verdict in a products action brought after the death of a man whose Ford Explorer rolled over and whose Firestone tires debeaded.
The lawsuit was precipitated by an accident on Route 30 west of Greenville in April 1997. Nathan Maier was driving a 1995 Ford Explorer 4-by-4 Eddie Bauer when the driver of a car in the right-hand lane began moving into his lane.
"When the vehicles were about one foot from each other, Maier swerved left onto the median, then overcorrected," said defense counsel Ronald Cabaniss.
"He then came flying back to the road." This sent the Explorer in a slide sideways. "The right rear tire debeaded as the tire rim dug into the pavement," he continued. The Explorer flipped over and rolled three or four times.
Maier was killed and one of his passengers, Allen Beene, was severely injured, sustaining a collapsed lung and lacerated liver. Maier's estate and family, along with Beene, sued Ford, charging the vehicle was defectively designed. Two other passengers had also been in the Maier vehicle; one died and one sustained severe injuries. These passengers also sued Ford; their claims were settled on confidential terms before trial.
The plaintiffs contended that the Ford Explorer was unreasonably dangerous and had a propensity to roll over during common driving maneuvers. According to the plaintiffs, the vehicle's center of gravity is too high, its track width is too narrow and its tires are too large. Although the tires on the Ford Explorer were Firestones, the plaintiffs did not claim that the tires were a factor in the accident.
Despite the absence of a claim against Firestone, however, the negative publicity over the Ford Explorer/Firestone rollover problems became an overwhelming presence in the courtroom. "These tires were not covered by the recall," said Cabaniss. "They had no basis to sue Firestone, but you heard 'Firestone tire' every other word in the trial."
Ford's attorneys countered this tactic immediately in voir dire, said Cabaniss, "by asking the jurors, 'How many of you think this case involves a Firestone tire that caused a rollover?' " Several of the prospective jurors raised their hands, he recalled. At that point, he said, "we let them know that this accident didn't involve tire separation."
The plaintiffs contended that Ford had failed to properly design and test the Explorer before sending it out on the road. The plaintiffs brought out excerpts from Ford documents to bolster this claim. The defense attorneys brought out the entire documents, to put the excerpts into context and pierce the plaintiffs' credibility, Cabaniss said.
The plaintiffs, he added, tried to focus the trial on the alleged improper behavior of the automaker. Throughout the trial, the defense team turned the focus back to the accident itself. Maier was traveling more than 70 mph when he swerved and then overcorrected, he said. The accident, he said, was caused by driver error.
The plaintiffs were looking for nearly $60 million in damages, including punitives. But on April 4, 2001, a Greenville jury found no defects and no negligence.
REZULIN GETS ITS ONLY WIN IN CASE OVER LIVER DEATH
CASE TYPE: Products liability
CASE: Mercado v. Warner-Lambert Co., No. 2000-42692 (Harris Co., Texas, Dist. Ct.)
PLAINTIFFS' ATTORNEY: George M. Fleming of Houston's Fleming & Associates
DEFENSE ATTORNEYS: Jack E. Urquhart and Laura E. DeSantos of Houston's Beirne, Maynard & Parsons
JURY VERDICT: for the defense
In 1997, Warner-Lambert Co. brought on the market what was intended to be a miracle medication for Type II diabetics.
By March 2000, however, the drug, Rezulin, was taken off the market under pressure from the Food and Drug Administration after a number of patients died from liver failure. This withdrawal from the market came two months after the death of Norma Culbertson, a 58-year-old diabetic, who had been taking Rezulin for two years before her death.
Culbertson's daughters sued Warner-Lambert and its new owner Pfizer Inc., charging that Warner-Lambert knew Rezulin could cause liver disease in its users, yet put the drug on the market and continued to sell it even after reports of serious incidents began piling up.
According to the evidence presented by the plaintiffs at trial, in 1998, long before Culbertson's death, internal Warner-Lambert memos indicated more than 500 reports of serious liver damage and at least 30 deaths.
In the past two months, four lawsuits against Warner-Lambert over Rezulin have gone to trial in the United States; two ended in hefty verdicts for the plaintiffs and one ended in a settlement just before verdict. The case marks the only victory for the defense, and lthough it didn't set a trend, it clearly indicated that these suits can be defended.
The plaintiffs contended that Rezulin caused Culbertson to suffer liver failure, which in turn caused her death. The defense contested this claim, said defense attorney Jack Urquhart. "There was considerable evidence in the medical records and in the death certificate that her diabetes caused renal failure, and that caused her death."
The plaintiffs countered by also pointing to the death certificate, which listed liver disease as a cause of death, and showing that Culbertson was significantly jaundiced when she died. The plaintiffs frequently cited the FDA removal of the drug from the market, along with various reports, including internal memos, linking Rezulin to liver disease.
The defense continued to hammer home its other major point: that despite the links to liver disease and the removal of the drug from the market, Rezulin was not defective.
"The most difficult hurdle was that Rezulin had been taken off the market," said Urquhart. "There is a logical presumption that if a drug is taken off the market that there must be something wrong with it." The defense turned this around, beginning in voir dire and continuing until closing arguments, contending that removal of a drug from public consumption is not evidence of a defect or negligence.
Rezulin came on the market because it was needed to treat severe, unresponsive cases of diabetes, the defense argued to the jury. And although it was "associated with some liver problems, including in rare instances, death, the benefit of the drug outweighed the risks," Urquhart said. The death rate with Rezulin, he argued, was lower than the death rate for insulin.
The defense maintained, he added, that Rezulin was cashiered by the FDA, not because of any inherent fault in the medication, but because other drugs had superseded it. "The motivating factor in the withdrawal is that two new drugs had the same effectiveness and had a better safety profile," he said. "When these drugs were introduced to the market, that led to the obsolescence of Rezulin."
The plaintiffs were seeking $25 million, but on Dec. 17, 2001, a Houston jury rejected their claim.
Thursday, February 21, 2002
Boom Time for "Wage and Hour" Litigation
Wage-and-hour class actions are good for the defense, too
Alexei Oreskovic -- The Recorder -- February 21, 2002
Over the past year Taco Bell, U-Haul and Pacific Bell have shelled out millions of dollars to compensate employees for unpaid overtime. Wage-and-hour suits are without a doubt the most popular employment class action these days, due in large part to a disparity between federal and state law.
Read more . . .
Tuesday, February 19, 2002
Bankruptcies Soar to Record in 2001
(Reuters) - With the economy mired in recession, debt-burdened U.S. consumers and businesses filed for bankruptcy in record numbers last year, the Administrative Office of the U.S. Courts said on Tuesday. The total number of bankruptcies filed during the year jumped 19 percent to 1.49 million from 1.25 million in 2000. That total easily surpassed the previous high of 1.44 million bankruptcies recorded in 1998.
2001 Bankruptcy Filing Statistics
Read more . . .
Friday, February 15, 2002
So What Now? -- Five questions every firm should ask about coping with the recession
The American Lawyer -- February 1, 2002
The American Lawyer asked 10 experts on law firm management to evaluate specific responses to the recession. Here are excerpts from what they said:
• Raise hourly rates?
Ward Bower -- Principal -- Altman Weil Inc.
Large firms should raise hourly rates selectively, not necessarily across the board. By "selectively" we mean: In practice areas that are in the greatest current demand, such as bankruptcy and litigation; in cases where the market rate for mid-range and more junior partners can be moved closer to senior partner rates; and in instances where multiple rate structures exist for premium and discount rates, but possibly not for standard rates. Rates must be evaluated annually, as costs inexorably increase. If rate evaluations are not done annually, opportunity is lost, as it is hard to catch up with major increases in a time of intense client scrutiny of legal fees.
[Ed. Note: Well, this guy's got it right. EM]
Bradford Hildebrandt -- Principal -- Hildebrandt International
Increases in hourly rates over the last three years have been substantial. During slowdowns, there is a lot of pressure on fees, not necessarily on rates. Being able to work closely with clients to respond to their needs is the most important thing. We do expect that there will be an increase in rates in 2002 of approximately 5 percent to 6 percent, despite the recession.
[Ed. Note: Where's the beef? EM]
John Henry II -- Chairman and CEO -- elawforum Corp.
For the past year we have been working with general counsel in major corporations. They are not going to accept rate increases from law firms. The market is finally beginning to demand that the major law firms price more competitively and move away from hourly rates to share the risk with their corporate clients.
[Ed. Note: Nonsense. EM]
David Maister -- Consultant
The questions law firms should be asking are: In what ways have we changed the way we practice to be more valuable to our clients? Would they agree we are now more valuable to them than we were two or three years ago? If the answer to these questions is "no," then raising rates would be crazy. Prices are a reflection of relative scarcity -- the balance of supply and demand. It's all very well that you can do wonderfully valuable things for clients, but if 20 other firms can credibly achieve the same thing, the price you can command won't be high. The key to raising rates successfully is to work with clients in ways they both value and do not commonly find among law firms.
[Ed. Note: Another genius. EM]
• Merge? Take on laterals?
DiPietro
In stock market lingo, this is a good time to buy. Firms with strong margins, good partner cohesion and a strategic vision are well positioned to cherry-pick from firms that don't possess these strengths. Partners with profitable practices at these lower-quality firms are increasingly worried about their firms' viability, and this makes them more open to moving.
[Ed. Note: Wrong. Partners with profitable practices are buying vacation homes, not moving to bigger firms whether they'll earn less. EM]
Bower
Large firms should take advantage of the current recession to acquire firms, practice areas and laterals, focusing particularly on distressed and undercapitalized firms where competent partners are seeking better economic opportunity. Growth by these means requires working capital, and undercapitalized firms may not be able to pursue such a strategy.
[Ed. Note: No. growth requires client base, nothing more. "Have Client, Will Travel - Wire Paladin, San Francisco". EM]
Michael Rynowecer -- President -- The BTI Consulting Group
Now is a good time for large firms to merge to strengthen their position within key clients -- that is, mergers between firms serving the same clients could provide some real, sustainable advantage.
[Ed. Note: Dead wrong. Mergers of firms serving the same client make no sense. Merge to broaden client base, not duplicate it. Whose client would that client be in such a merger? Who would be the client's contact person? Partners with client base won't want to merge with another firm also serving the same clients. No partner wants to lose the coveted role of rainmaker as to his/her client(s). What is this guy thinking? If anything, staying separate guards against losing a good client because someone in the merged firm from the other side screwed up. And, except for the very high end of the market where even low level partners make more money than they ever dreamed possible, most mega-mergers are inherently unstable because they stifle financial growth of rainmaking juniors. Such mergers will endure only as long as the powerful partners pulling them together for their own temporal benefit remain in control. Once those bully partners retire, the glue goes and the inherently unstable financial dinosaurs they created will crumble as younger partners with portable business find more profitable opportunities on their own or with smaller operations. EM
"Bigger isn't better; taller isn't braver; stronger isn't always wise
Smaller isn't necessarily the lesser, guts can come in any size
Lady luck can favor just a little shaver over one who's six foot three
Brains, in any tussle, mops the floor with muscle! Bet your life I'm glad I'm ME!
"Bigger isn't keener; larger isn't bolder; higher might be low inside
When you need to lean upon a friendly shoulder, narrow's just as good as wide
See the mighty lion, sittin' there a cryin', bitten by a tiny flea
Mammoth was collosal; what's he now -- a fossil?
Bet your life I'm glad I'm ME!
-- "Bigger Isn't Better", from Barnum]
Leishman
A tough economy accentuates the gaps in the pecking order of firms. Second-tier firms -- regionally or globally -- will feel a stronger urge to merge to reposition themselves and defend against lateral recruitment by top-tier firms. But just because one can doesn't mean one should. Mergers rarely make sense.
[Ed. Note: Garbage. The market for "second-tier" firms will grow exponentially as clients continue to recognize good quality responsive service at reasonable rates and total charges. EM]
Rosenthal
About 75 percent of [proposed] mergers do not become a reality, and in difficult times merger is not the best strategy. Hiring laterals with good books of business is a better idea.
[Ed. Note: Correct. EM]
Maister
The overwhelming majority of mergers fail to deliver any positive impact on profits per partner and are a huge diversion of management attention. On the other hand, a firm should always be on the lookout for selective laterals who can help get the firm into new areas and disciplines. Just looking for big names isn't sufficient. A lateral only helps if he or she is able to help the firm build a practice area, and that takes someone who is prepared to act as a team player, invest in the future, and coach others. Too many "big-name laterals" are, in fact, lone wolves who just want to get paid more for their books of business and have no interest in sharing or institutionalizing their skills.
[Ed. Note: Correct. EM]
• Roll back associate salaries?
Bower
Large firms already at the top of the starting salary market need not push the envelope further in a labor market characterized by slower growth and reduced hiring. Salary increases for incumbent associates should be minimal until the market requires real increases. The dynamics of the [current] labor market should allow for correction of the reduced margins resulting from dramatic increases in 1999 and 2000.
Rynowecer
Experience in other professional service firms shows that rollbacks can have a long-term negative impact. They discourage current associates and can undermine the best of recruiting efforts. It may be time to restructure salaries, with bonuses to remain competitive for the best and brightest, while managing the cost structure.
Peter Zeughauser -- Principal -- The Zeughauser Group
There are two issues here. The first is merit pay aimed at keeping the keepers -- partners and associates. The second is market conditions: The nature of a firm's practice, its financial health, utilization, leverage, and its need and ability to attract and retain keepers should dictate what lawyers are paid.
Maister
The underlying people crisis -- the "war for talent" -- is still there. There remains a shortage of young knowledge workers, and as soon as this recession goes away, we'll be back in the same mode we were 18 months ago, bemoaning the lack of talent available to fill the demand. Associates are paying close attention to how firms handle themselves in the down market.
Patrick McKenna -- Principal -- Edge International
Tower Snow Jr. [the former chairman of San Francisco's Brobeck, Phleger & Harrison], claims he didn't say this, so allow me: "Any partnership that would lay off associates during an economic downturn is morally bankrupt!" It's shortsighted to circle the wagons and fire inward. There is a need for foresight and preparation for when the economy turns around. This is a time for firm leadership to declare that we're all -- partners and associates -- in this together, and it's going to require some short-term salary reduction sacrifices.
Read more . . .
The Tech Tumble
Silicon Valley's high fliers take a dive
Silicon Valley's technology specialists have been hit hard by the end of the technology boom, according to 2001 financial data on the Bay Area's ten highest-grossing firms gathered by The Recorder, American Lawyer Media's daily newspaper in San Francisco. Brobeck, Phleger & Harrison; Wilson Sonsini Goodrich & Rosati; Cooley Godward; and Gray Cary Ware & Freidenrich all posted declines in profits per equity partner. (Pillsbury Winthrop was formed through a merger in 2001, so comparisons to 2000 results are not available.)
See Table.
